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When you receive a motor insurance quote, the biggest mistake is judging it by one headline figure. A better way is to read it like a bill: separate line items, plus discounts, plus tax. That’s how you understand why two quotes with a similar total can still lead to very different out-of-pocket costs at claim time.
This breakdown also explains why the same car can show a different car insurance price across insurers. Some quotes lean heavily on add-ons, some on OD pricing, and some look cheaper only because the coverage is thinner or the deductibles are higher.
The Two Pillars Behind Most Quotes
Most private car policies are built on two coverage pillars. One part pays for damage to your own vehicle. The other part protects you if you cause injury, death, or property damage to someone else.
That second pillar is what people usually mean by third party car insurance, and in many places it’s the legal minimum you must carry. A “comprehensive” plan typically combines both pillars, and then you can add optional covers on top.
The Standard Premium Structure
Insurers format quotations differently, but the math is usually the same. You start with own-damage and third-party premiums, add optional covers, subtract eligible discounts, and then apply GST. Here’s the simplest way to think about it:
- Own Damage (OD) premium (your car’s risk)
- Third-Party (TP) premium (your legal liability)
- Add-ons (optional extensions)
- Discounts (NCB, voluntary deductible, etc.)
- GST at 18% (applied on the payable premium)
If you’re comparing two quotes, compare each line, not just the final payable amount. That’s where you’ll see what you’re truly paying for.
Own Damage (OD) Premium
OD is the portion that pays to repair or replace your car if something covered happens, such as an accident, theft, fire, or certain natural events, subject to exclusions and deductibles. This is also the part where insurers have the most flexibility, so it changes noticeably from one quote to another.
OD pricing usually reacts to practical factors like where the car is driven and parked, the repair-cost trend for that model, and how you use the vehicle. It also depends heavily on the insured declared value (IDV), because the IDV becomes the “reference price” for many claim settlements.
Third-Party (TP) Premium
The TP portion covers the legal liability you may face if your car harms a third party. In many markets, the third party premium is regulator-guided (often tied to engine capacity or vehicle class), which is why that line item looks similar across insurers for the same car type.
Motor insurance premiums generally attract GST at 18%. In other words, even if your base premium is competitive, the final payable number will still rise by tax, and that tax applies after discounts are accounted for.
Optional Covers That Change Claim Experience
Add-ons are where policies start to feel “custom,” and they’re also where two quotes can look similar but behave very differently during a claim.
- Zero depreciation, engine protection, roadside assistance, consumables cover, key replacement, and passenger benefits are common examples.
- Don’t buy add-ons based on the label alone. Two insurers can both offer “engine protect,” yet one may exclude water ingress in specific circumstances or apply stricter documentation requirements.
- From a decision point of view, add-ons are usually the most controllable part of your quote. If you need to cut costs without weakening the foundation, trimming add-ons thoughtfully is often better than pushing IDV too low.
What Your Past Claims Do To the Pricing
Discounts reduce premiums before GST, and eligibility depends on rules (NCB, anti-theft devices, voluntary deductibles, insurer campaigns). The biggest one at renewal is usually the No Claim Bonus, because it can materially reduce OD.
What many buyers are surprised by is the claim history impact. A claim can reduce or reset NCB, and some insurers may also price more cautiously after prior losses, even if the base third-party portion stays stable.
Wrapping Up
To compare two premiums fairly, keep the inputs consistent. Match IDV, deductibles, add-ons, and coverage limits before deciding which quote “wins.” When you do this, the “best” option often isn’t the lowest number. It’s the plan that protects you predictably when something goes wrong, and keeps your comprehensive policy price aligned with the kind of risks you actually face.
